How would making 2025 tax and spending provisions permanent affect U.S. debt projections through 2035?
Executive summary
Making the temporary 2025 tax and spending provisions permanent—whether those in the One Big Beautiful Bill Act (OBBBA), parts of H.R.1, or reconciliation proposals—would materially worsen U.S. debt trajectories through 2035, raising ten‑year deficits by several trillion dollars and pushing public debt substantially above CBO’s current‑law baseline of about 118 percent of GDP in 2035 [1] [2]. Independent scorekeepers and models agree the order‑of‑magnitude impact is in the multiple‑trillions over the next decade, with secondary effects (interest costs, macro feedbacks, and assumptions about tariffs and yields) able to push projections even higher [3] [4] [5].
1. The current baseline: “what CBO expects if laws expire as written”
Under CBO’s January 2025 baseline—CBO’s standard “current law” projection where many 2017 and 2025 temporary tax changes expire—federal debt held by the public is projected to reach roughly 118 percent of GDP by 2035 and deficits to remain large as entitlement and interest costs rise [1]. That baseline reflects scheduled expirations of tax cuts and incorporates enacted 2025 legislation as written; it serves as the comparator for “permanence” scenarios [1] [6].
2. The permanence counterfactual: how scorekeepers quantify extending 2025 provisions
CBO, the Joint Committee on Taxation (JCT), the Penn Wharton Budget Model (PWBM), and independent budget analysts have modeled making 2025 temporary tax and spending changes permanent and consistently find multi‑trillion‑dollar increases in deficits and debt: CBO finds primary deficits about $4 trillion larger over 2025–2034 if key TCJA provisions are extended permanently [3], JCT/CBO estimate making 16 expiring H.R.1 tax items permanent raises primary deficits by about $1.4 trillion over 2025–2034 [4], and PWBM estimates illustrative reconciliation permanence would boost primary deficits by roughly $4.8–$5.8 trillion over ten years depending on the package [5].
3. The headline numbers through 2035: debt climbs sharply under permanence scenarios
Putting those pieces together, CRFB’s adjusted August 2025 “alternative scenario” that assumes many 2025 temporary provisions are made permanent projects deficits of roughly $28.5 trillion for 2026–2035 and public debt reaching about 134 percent of GDP by 2035 under plausible interest and tariff assumptions—well above CBO’s 118 percent baseline [2] [7]. CBO/JCT’s focused H.R.1 exercise likewise finds debt held by the public could rise from around 117 percent to roughly 127.7 percent of GDP by end of 2034 if key provisions are made permanent [4]. PWBM reports debt would increase by about 11.1 percent in ten years under its illustrative permanence scenario [5].
4. Why permanence amplifies debt: interest, revenue loss, and spending growth
The mechanics are straightforward and corroborated by the sources: permanent tax cuts lower revenues and raise primary deficits, which require more borrowing; higher debt then increases net interest outlays—CBO and CRFB both highlight substantial added interest costs (for example, Public Law 119‑21 raises debt‑service costs by roughly $718 billion through 2025–2034) that magnify the fiscal damage over the decade [8] [7]. Moreover, entitlement spending (Social Security and Medicare) is projected to grow as a share of GDP regardless, so permanently higher deficits are layered on top of a rising structural spending path [1] [9].
5. Uncertainties, dynamic effects, and alternative readings
There is meaningful uncertainty: macro‑dynamic feedbacks can alter the net effect—some PWBM runs show small GDP or labor effects from permanent changes, while NBER and CRFB stress much larger long‑run debt outcomes if temporary cuts are assumed permanent [5] [10]. Projections also depend on interest‑rate paths, tariff revenues, and judicial outcomes about tariff legality; CRFB’s worst‑case alternative assumes higher yields and removed tariff revenue and finds debt could reach 134 percent of GDP by 2035 [2] [7]. Policymakers’ choices about offsets, spending cuts, or future tax increases can materially change the picture—CRFB quantifies the large deficit reduction needed to stabilize debt near desired targets [11].
6. Bottom line: permanence meaningfully worsens the decade outlook
Across multiple official and academic models, making 2025 tax and spending provisions permanent would add several trillion dollars to deficits through 2034–35, push public debt materially above CBO’s current‑law baseline (moving debt in many scenarios from ~118 percent toward the 125–134 percent range by 2035), and raise interest burdens that further accelerate debt growth absent offsets [1] [2] [4] [5]. How alarming that outcome is depends on political tolerance for higher debt, chosen offsets, and future macro conditions—facts the scorekeepers explicitly signal and that should frame policy debate [11] [10].